US shutdown brings some relief for Indian IT firms

There could be some cheer for domestic IT companies such as Infosys and Wipro with the much-dreaded immigration Bill unlikely to become a law because of the US Government shutdown.

With the continued standoff between the US Senate and the Congress which has kept the government offices there from working, chances of the Bill being passed by the House of Representatives are remote. Incidentally, the Senate has already passed the Bill. In case the Bill is not passed before this year-end, it is very unlikely that it will get passed next year because of the congressional elections in the US.

Running out of time

Kevin A Hassett, an US economist and a former policy consultant with the department of treasury, told Business Line in a telephonic interaction that legislators are running out of time as far as passing the Bill into an Act is concerned. “The problem is the US economy is not doing well and the Government shutdown has already added to the woes. Legislators have much less time for the immigration Bill,” Hassett said.

Rajkamal Rao, a former director with consultancy firm, PwC who deals with immigration issues, said: “Can you imagine rubber stamping the Bill during an election year. It is not even there in the House calendar.”

But Infosys CEO and Managing Director S.D. Shibulal said the company is on a “wait and watch” mode as far as immigration Bill is concerned.

The Bill has already been passed by the US Senate and needs to be passed by the House of Representatives for it to become a law. The Bill seeks to increase costs for software service exporters and restricts placement of H-1B employees in the US.

In his report on the Bill, Hassett says salary and reporting requirements have been tightened under the provisions of the Bill. Employers will be required to pay H-1B workers higher wages and advertise for the position on a special Web site set up by the Department of Labour.

Employers will also have to give priority to Americans before turning to foreign workers in their recruiting process, Hassett, who was the adviser to presidential candidate for Mitt Romney in 2012 elections, said.

Rao, who has authored a book on the immigration Bill, said in the order of priorities right now, the Bill stands last. If there is any possibility at all, then both the Senate and the House of Representatives have to agree on passing H-1B provisions separately but the President Barack Obama has repeatedly said that he is against piecemeal approach to the Bill.

“The trust between the Republicans and the Democrats has been very, very low. For them to pass the Bill in which H-1B is a part will be a pure miracle,” he said.

Disastrous for both

Hassett, who served as a senior economist at the Board of Governors of the Federal Reserve System, said such provisions can be disastrous for both the US and Indian companies.

He blamed the US politicians for trying to gain leverage from trying to push for such laws. He said it is wrong to suggest that immigrants have taken away jobs from the natives.

“Immigrants not only contribute to the US economy through innovative ideas and scientific research, but also by starting new businesses and industries and creating new jobs for the natives,” he said in his report.

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